Many Canadian families are still of the ‘traditional’ kind but, according to Statistics Canada, their numbers are declining while those for blended families are growing.
The 2011 census included stepfamilies (StatsCan’s term for blended families) for the first time, and according to the census stepfamilies now represent about one in eight families with children.
Money matters are often a challenge in any relationship, and they become even more challenging in the case of a second (or third) marriage or common-law relationship, especially when they include children from previous and current relationships. Here are some points to consider:
If you and your partner have separate financial plans, it’s important that you come together and develop a cohesive plan to help attain your new family’s objectives.
Determine how you are going to treat all your children equally. Establish an RESP for every child that does not already have one.
If you and your partner designate each other as the direct beneficiary of all of their assets, when one partner dies, everything goes to the survivor, potentially disinheriting the children of the deceased spouse. And, if the surviving partner should remarry, the new partner could become entitled to the estate (or a large portion of it) which could disinherit not only the children of the deceased partner but even the children of the survivor.
For these reasons, a standard will is not recommended for a blended family. Other strategies include dividing the estate at the time of death of the first parent or using a spousal trust to protect the assets for both families. It’s crucial to speak to your legal advisor regarding a will with terms appropriate for your blended family.
Similar problems can arise from jointly held property. Many couples choose to hold property jointly so title passes automatically to the survivor on the death of the spouse and avoids probate fees. But if you have children or other dependants from a previous relationship and want them to share in the value of your property, then holding title to the property jointly with the right of survivorship isn’t recommended. Speak to your legal advisors regarding ways to hold title to property in a way that benefits your children and carries out your wishes.
Andy Erickson is the division director with Investors Group, Vernon. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.